• Ethereum (ETH, Tech/Adoption Grade “A-”) retreated to around the $3,500 level yesterday but has since jumped back above $4,100.
• Bitcoin (BTC, Tech/Adoption Grade “A-”) weathered a media storm and stabilized around $51,000.
• Bitcoin’s market dominance slid to 41%, with traders eyeing the 40% level for a potential rebound.
Ethereum saw a drop from just below $4,400 to $3,500 yesterday as profit-taking and the redistribution of gains triggered outflows into some of its competitors and smaller projects.
The second-largest cryptocurrency by market cap is still trading well above its 21-day moving average. That and the recent rebound above the $4,000 level are positive signs.
Ethereum is still plagued by extremely high gas fees — Uniswap’s (UNI) sit at about 112 Gwei at the moment — but that doesn’t seem to be enough to knock ETH off track just yet.
Here’s Ethereum’s price in U.S. dollars via Coinbase Global, Inc. (Nasdaq: COIN):
Bitcoin fell sharply following Tesla, Inc.’s (Nasdaq: TSLA) announcement to stop accepting BTC as payment. CEO Elon Musk has a considerable influence on the crypto market, and his reasoning of environmentalism was widely criticized.
The King of Crypto has failed to hold above its 21-day moving average and has yet to truly confirm downside support, meaning it’s unclear whether the worst is over for Bitcoin.
We could see a bounce above the support level just below $50,000, or it could face more short-term headwinds before resuming its bull-market ascent.
Here’s Bitcoin’s price in U.S. dollars via Coinbase:
Index Roundup
We saw moderate gains earlier in the seven-day trading week which ended Thursday before a series of news developments turned market sentiment more bearish.
The Weiss 50 Crypto Index (W50) fell 7.32%, as the broad market saw significant volatility and retraced towards the end of the week.
Without Bitcoin, the Weiss 50 Ex-BTC Index (W50X) shed less at 4.76%.
Breaking down performance by market capitalization, we see a return to altseason normalcy, with small-caps gaining the most.
The Weiss Large-Cap Crypto Index (WLC) lost 7.26% as most large-caps faced additional downward selling pressure from margin calls for traders using leverage.
After setting the pace last week, the mid-caps struggled the most this time around. The Weiss Mid-Cap Crypto Index (WMC) dropped 10.62%.
Small-cap cryptocurrencies, returning to their familiar place as the strongest outperformers, were the sole winners. They managed to avoid the broader pullback and are even boasting double-digit gains of 22.23%, as tracked by the Weiss Small-Cap Crypto Index (WSC).
The continuation of altseason with an extended small-cap rally is expected. But Bitcoin must find a bottom to secure the health of this rally. That’s what will reignite the next phase of the run.
Bitcoin’s market dominance is 14 percentage points lower than a month ago, and we have yet to see a convincing reversal.
Outflows into altcoins from Bitcoin, Ethereum, and other notable pairs accentuated the large-cap retreat. Those funds flowed into the smaller altcoins, stabilizing them through this volatility.
Still, the rally we’ve seen so far today in most of those large-cap cryptos is a good sign.
Notable News, Notes and Tweets
• Pomp fires back at Elon Musk after Tesla declared it would halt accepting Bitcoin as a form of payment due to environmental concerns.
• Ethereum creator Vitalik Buterin sparks controversy after rug-pulling tokens of dog-themed cryptocurrencies.
• Bloomberg reports that Binance is under regulatory crossfire for potential money laundering and tax issues.
What’s Next
The crypto market has bounced a bit today after enduring a barrage of negative news earlier in the week.
The timing of these headlines wasn’t ideal, but none of them change the long-term viability of Bitcoin or the other promising crypto projects primed to carve their place in the industry.
Altseason always brings wild storylines — including multi-bagger gains or the explosion of dog-themed cryptocurrencies. But behind the scenes, institutional adoption and macroeconomic factors are still slowly pushing the industry to new heights.
While the crypto market may get choppy and experience volatility in the short term, its fundamentals look stronger than ever.
Best,
Sam
